Estoppel doesn’t Prevent N.D. WSI from Pursuing Subrogation on Workers’ 3rd Party Settlement

Case File

According to North Dakota’s top court, judicial estoppel didn’t prevent WSI from pursuing subrogation against a worker who received settlement funds from a third party.

Case

Moos v. North Dakota Workforce Safety and Insurance, No. 20250437 (N.D. 06/25/26)

What Happened?

A worker was injured in a work-related incident where an aircraft sprayed him with toxic herbicide. He filed a workers’ compensation claim and notice with North Dakota Workforce Safety and Insurance, identifying the herbicide applicator as a potentially liable third party.

WSI issued notice to the worker of its decision to accept his claim and award benefits for ocular pain and chemical exposure. An attorney for the worker filed a notice of intent to bring a third-party action on the worker’s behalf.

WSI issued notice to the worker of its decision to terminate benefits, concluding the incident was not a substantial cause of his current condition. The order relied on an independent medical review that concluded the chemical exposure temporarily affected the worker’s eyes and skin but did not cause his ongoing tremors or paresthesia.

WSI paid a total of $10,628.18 on the worker’s claim, including $2,077 for the independent medical review.

The worker filed a third-party personal injury action against the herbicide applicator. In that case, a stipulation for dismissal with prejudice was filed, in which the third-party action settled for $100,000.

WSI issued an order declaring a subrogation lien of $8,551.18, reflecting the total $10,628.18 WSI paid in benefits less the $2,077 independent medical review cost.

An administrative law judge concluded that because the worker had not paid the subrogation lien within 30 days, WSI was entitled to $8,551.18 in subrogation.

The worker appealed, and the court affirmed the ALJ’s order. The worker then appealed to the North Dakota Supreme Court, arguing that judicial estoppel barred WSI’s subrogation claim because WSI initially denied benefits for his left arm and neurological injuries but subsequently sought subrogation from settlement of the third-party action, where the worker asserted the injuries were compensable.

Rule of Law

Under North Dakota law, WSI has a statutory subrogation interest when an injured employee recovers damages from a third party. The subrogation interest exists to reimburse the fund, to the extent possible, at the expense of the persons at fault.

Judicial estoppel is an equitable doctrine that precludes parties from taking inconsistent or contradictory legal positions in the same successive litigation. Judicial estoppel applies only where a party’s subsequent position is “totally inconsistent” with its original position and does not apply where distinct or different issues or facts are involved.

What the North Dakota Supreme Court Said

In ruling against the worker, the court looked to State ex rel. Workmen’s Compensation Bureau v. Clary, 389 N.W. 2d 347 (N.D. 1986), in which a worker contended that recovery should have been reduced by the percentage of negligence assigned to him under equitable principles. The court concluded recovery could not be reduced for employee negligence under equitable concepts, and subrogation rights are available to the extent allowed under. Instead, WSI’s subrogation rights are statutory and thus not controlled by equitable concepts.

Applying the principles from the Clary case, the court similarly concluded that the equitable doctrine of judicial estoppel did not apply to subrogation claims arising out of workers’ compensation proceedings.

Verdict: The North Dakota Supreme Court affirmed the lower court’s ruling in WSI’s favor.

Takeaway

Judicial estoppel does not apply to North Dakota subrogation claims arising out of workers’ compensation proceedings.

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